Ross McDonald | Banker | Strategist | CFO

Grouse Show School - Discounted lessons

Snowfall is coming. The ski hills beckon - yippee! Want to improve the skiing of yourself or your kids ... here's two ways to get discounted lessons at Grouse Mountain, the Peak of Vancouver.

For skiers or riders that seek group lessons then Grouse Mountain offers a 20% discount on lessons booked before 30th November 2011. Applies to Ski Wee, Zone Camp, Adult Clinics or Ladies Only group lessons.

For skiers that seek private or semi-private ski instruction then Grouse Mountain offers a 10% discount on ski lessons booked with myself, Ross McDonald. Simply mention Ross McDonald during your booking of private or semi-private lessons when calling Grouse Mountain Guest Services (tel 604 980 9311). As a CSIA qualified ski instructor then I have taught toddlers to pensioners, from first-time-on-skis to good intermediates. It's wonderfully rewarding to see guests have fun on the hill, acquire or improve skills, gain confidence on their equipment or on different terrain and leave lessons beaming with a big smile.

For those (like me!) that cannot wait until the season starts then the long term weather forecast suggests that there will be another fabulously snowy season. La Niña weather pattern typically means cooler than normal temperatures and consistent heavy precipitation during the winter months. Last year La Nina blessed BC with bountiful quantities of snow ... over 15m at Whistler Blackcomb and over 5m at Grouse Mountain and other North Shore hills. Weather forecasts have been published by National Oceanic and Atmospheric Administration, AccuWeather and Farmers Almanac.

Think snow!

Clean West mentee and client in NVBC 2011 winners

Clean West Capital was delighted with the recent awards ceremony of New Ventures BC that celebrated the success of innovative early-stage technology BC companies and distirbuted almost $400,000 in prize money. A handful of the top 10 finalists were clean technology ventures, and two of the top three prize winners were waste/recycling technology ventures. Waste/recycling has been a primary sector of client work of Clean West over the last few years and Clean West continues to be very positive on this sector.

In the current NVBC contest then Clean West President & CEO Ross McDonald co-mentored MineSense, a metals recovery waste technology venture. The MineSense team was delighted to win third prize and scoop $40,000 in prize money. Go for it Andrew!

First-prize was awarded to Polymer Research Technologies, a current consulting client of Clean West Capital in regards application for grant finance to Sustatinable Development Technology Canada - a $550 million Canadian federal fund. Polymer Research Technologies was awarded $130,000 in prize money.

Thanks also to the team at Quadrogen Power Systems, mentee of Ross McDonald in the 2010 NVBC contest in which it won two prizes. In the spirit of peer-support then the Quadrogen team provided thoughtful guidance in the current content. Thanks guys, appreciated.

BCIC New Ventures 2011

Last night saw the kick-off of BCIC New Ventures, a BC entrepreneurship competition that has $370,000 of prize money.

I'll be participating as a mentor, for the third year, and it was great to meet budding entrepreneurs and hear of their venture ideas. Good luck in your next round submissions.

My five top tips for success in BCIC New Ventures:
1. Have a compelling concept ... Not all ideas are great. Nor indeed different. Understand your competitors. Find your 'special sauce'.
2. Define your value proposition ... What is the product? Who are the target customers? How does the business/revenue model work? Defining negative aspects (e.g. what customers not to target) is important as it gives focus. Simple is good.
3. Source secondary research ... All entrepreneurs think that their idea is fabulous! But only a subset can provide proof with external data. Market sizing and competitor analysis are precious.
4. Refine a crisp elevator pitch ... Describe your business in 30 seconds to a stranger, so that they understand it and want to learn more. It's much harder than you might think. Practice out loud.
5. Think big ... Let's assume that your idea works. How can it be scaled to be a big business? Does it have "sustainable advantage"? Investors like this as it means that they make money :)

UK Young Entrepreneur of the Year

The coveted Shell LiveWIRE Young Entrepreneur of the Year Award, which celebrates the achievements of the UK’s leading young entrepreneurs, is now open for entries.

The Award offers up-and-coming business owners aged 16-30 the opportunity for national recognition, as well as a substantial financial boost of £10,000 for their business. Shell LiveWIRE is one of Britain’s longest running youth entrepreneur awards and was established in 1982 as a Shell Social Investment Programme. Previous winners and finalists include successful entrepreneurs Robert Matthams fromShiply.com and Jamie Murray-Wells from Glasses Direct.

Innocent Smoothies won the Young Entrepreneur of the Year Greater London Final in 2000 – the company’s first ever business award. Innocent has since grown from 4 staff to over 200, and now has a turnover of £128m.

The 2009 winner of the Shell LiveWIRE Young Entrepreneur of the Year Award, Robert Matthams, founded Shiply.com, a transport website matching people moving goods with delivery companies already making similar journeys. Since winning the award, Shiply.com has grown by 200%, expanding its customer base to over 14,000 transport companies and 120,000 consumers. This has helped save more than 10 million unnecessary road miles.

Shell LiveWIRE also supports young entrepreneurs with its Grand Ideas Awards. Every month, up to five aspiring entrepreneurs are awarded a Shell LiveWIRE Grand Ideas Award of £1,000 to fund an innovative project to help get their business idea off the ground. The enterprise scheme also hosts a business networking community at www.shell-livewire.org with 100,000 members, enabling the best business brains from every corner of the nation to share ideas, insights and inspiration with fellow entrepreneurs who understand the challenges they are facing.

The deadline for applications to the Young Entrepreneur of the Year Award is 5pm on the 6th September 2010. To qualify for entry, applicants must be aged 16-30 and have been trading not less than three months and not more than 18 months on 6th September 2010. To find out more or to enter the Shell LiveWIRE Young Entrepreneur of the Year Awards, visit www.shell-livewire.org

GlobalScot

Ross McDonald, President Clean West, is honoured and delighted to be nominated a GlobalScot, being a network of a few hundred international Scottish leaders invited by the Scottish government to help mentor Scottish growth companies. The GlobalScot nomination was confirmed in late 2009 with a personal invitation letter from Alex Salmond, First Minister for Scotland. Clean West expertise in renewable energy is timely both given the increasing emergence of clean technology ventures plus also the 2010 launch of the UK feed-in tariff. Clean West embraces the opportunity to leverage its expertise and international network, as a GlobalScot, for the benefit of promising Scottish companies.

SFU Guest Speaker - Early-stage finance

Clean West is always delighted to interact with entrepreneurs. In November 2009, Ross McDonald of Clean West, was a guest speaker to an entrepreneurship class at Simon Fraser University, Vancouver.

A PDF file of the related slides can be downloaded.

Canadian Waste Recycling Expo

The 12th annual Canadian Waste and Recycling Expo will take place in Vancouver, Canada, on 28th/29th October 2009. The event strives to bring together various stakeholders - including equipment manufacturers, municipal/other buyers, site operators, policy makers and expert advisors - and is targeted as a Canada-wide, rather than BC specific, event.

In addition to the exhibition hall then two days of expert sessions are available. Free exhibition entry tickets are available via CWRE.

Clean West, a clean energy corporate finance firm, is positive about the waste to energy sector so will attend the event on Thursday 29th October.

US green company rankings

Curious about the sustainability credentials of large US companies? Newsweek has just published its rankings of the top 500 Green Companies, based on a methodology supported by KLD Research and Analytics, Trucost and Corporate Register.

The top firms? Check out the article or rankings for details.

BCIC Connect 09 event

Ross McDonald, President of Clean West, today will attend Connect 09, the annual landmark event of the BC Innovation Council, as a nominated technology leader within the clean energy / clean technology sector.

Connect '09 will bring together 500+ company executives, academics and entrepreneurs for a series of panel sessions, awards and a huge Structured Network session.

The Structured Network session will include a number of industry-specific network areas, at which a few local technology leaders will interact with and provide guidance to event attendees. Clean West encourages BC innovators and policy-setters to attend this commendable event. For those with interest in clean energy or clean technology - such as wind power, solar power, or biomass / waste to energy - then feel free to visit the clean technology stand in the Structured Network session to make an introduction. See you there.

BC lessons from Ontario FIT

Clark Wilson LLP's highly informative blog Megawatt, recently published a posting that raised ten lessons that British Columbia could take from the Ontario feed-in tariff.

Clean West applauds these informed suggestions and agrees that British Columbia can learn numerous energy policy and leadership lessons from Ontario. But it can similarly take ideas from the US and other geographies.

Clean energy developers will question Why BC? As will investors. Ontario offers higher off-take prices (and therefore investor returns) and substantially lower developer risk (feed-in tariff vs clean call) than BC. The US offers substantial financial incentives (that boost returns and lower risk). In the absence of compelling ties to BC, or material sunk costs in BC projects, then developers and investors will simply choose other geographies over BC. Clean West sees this trend in the marketplace.

Ontario's feed-in tariff is as bold as it is controversial. The related power acquisition cost for clean power is high (utility wind prices escalate from 13.5c/kWh versus 10c in BC SOP, solar rooftop up to 80c/kWh). Yet, the provincial content requirements are very strict and escalate further in time. As a result then Ontario will create jobs across the clean energy equipment and service value chains and also stimulate clean energy production. From engineer installers that put solar panels on residential rooftops to manufacturers of wind turbine blades and gears, then jobs will be created and a new industry will be born. Ontario has learned from its RESOP challenges and make better policy. Clean West celebrates the Ontario feed-in tariff.

BC relishes technological innovation. It has abundant talented people with highly creative ideas. And supportive policy. This is absolutely fantastic. No question. But if BC has the intent to meaningfully produce clean energy, in addition to simulate cleantech IP, then it needs to demonstrate to developers and institutional investors that BC is worth their attention. Policy makers should reflection on the Ontario / BC items in the list per Clark Wilson LLP, and also consider the US and other geographies (e.g. offshore wind in Europe).

Yet there is a silver lining. BC policymakers can learn from the successes and mistakes of their peers elsewhere. As my old business school professor, Costas Markides, advocates in his corporate strategy book Fast Secondthen second-movers have the luxury of speed and cost over their first-mover cousins. Second-movers can avoid the tardy processes and expensive budgets inherent in creating something from scratch.

BC is blessed with significant resources, both natural and people. It has the fortuitous opportunity to steal great ideas, avoid pitfalls and race to be a clean energy leader. Or not.

Ontario feed-in tariffs

Ross McDonald welcomes the Ontario Power Authority launch of the first feed-in tariff of North America.

Feed-in tariffs are not a new concept. They were introduced in Europe many years ago (e.g. Germany 1990, Spain 1994). But they are widely credited as the primary reason for the substantial uptake in clean energy production, and therefore clean technology and equipment manufacture, in selected European geographies. For example then in 1990 Germany had 56MW wind power, 2MW solar power and 190MW biomass power. By 2008 this had grown to 24GW wind power, 5GW solar power and 3GW biomass power.

So what's the big deal? Feed-in tariffs stimulate the development of clean energy power. Key aspects of the OPA FIT policy are noted below.
■ Power type - various renewable power sources - including wind, solar, biomass and biogas
■ Transparency - all PPA terms, including power acquisition cost, are known prior to PPA application.
■ Power capacity - policy has no cap on renewable energy
■ Negotiation - minimal bilateral PPA negotiation as preset standard terms
■ Commitment - 20 year power purchase agreement
■ Timeline - standard terms greatly simplify the PPA approval process, estimated at two to four months

Is there a catch? Yep. The feed-in tariff in Ontario is not just clean power, but creating local jobs. An important mandatory provision is domestic content, which requires developers to purchase a material proportion of products and services from Ontario suppliers.

Will the feed-in tariff improve the attractiveness of Ontario to clean energy developers? Yep, without doubt. It materially lowers developer risk, and enhances returns to make projects more financially viable.

WSJ: Business plans, pitfalls & fixes

John Mullins, Chair of Entrepreneurship at London Business School and my old professor, just published an article in the Wall Street Journal. The article concerns business plans, common pitfalls and how to avoid them.

According to John then the five top business plan pitfalls are:
■ Here I am, Nevermind the problem - excessive technology focus, no commercial application
■ A Coke for every kid in China - assume small market share of 'huge' market
■ Just look at our [paper] profits - impressive analytics, tripping on simple business
■ Our team walks on water - dazzling credentials over relevant experience
■ Everything is beautiful - dismissive or ignorant of risks, challenges

Full article text.

1GW off-shore wind project - London Array

Clean West reports that the London Array is a 1GW nameplate capacity off-shore wind project located 11 km off the south-east coastline of the UK. Over 300 turbines will cover 90 square miles, and it is expected to provide power for 750,000 homes. Or so it was planned.

Since initial formation and permitting in 2006 then the three developers of the London Array - E.ON, Dong Energy and Madsar - have to'd and fro'd through political challenges and financial viability. Indeed in 2008 the project looked likely to collapse.

But no more. Today it was announced that, following a doubling of offshore wind incentives from the government, that the developers will begin construction during the summer of 2008. The 630MW first phase of the London Array, costing two billion pounds, is expected to be operational during 2012, to provide clean power for the 2012 London Olympics.

To put this 1GW project into perspective, the global off-shore wind industry has operational capacity of 1.5GW. The largest single off-shore wind project in operation is less than 200MW.

With one-quarter of Greater London homes soon powered by the London Array and one-half of Scottish homes planned to be powered by multiple off-shore wind projects, then both the UK wind industry and UK wind policy are certainly making substantial strides.

Half of Scotland power generated from wind farms

Those canny Scots intend to build 10 offshore wind farms, capable of generating over 6GW of wind power. The wind farms each have nameplate capacity of between 280MW and 1.5GW. Exclusive land permits were recently issued by the UK Crown Estate.

This is much more than news release about renewable energy. Rather, this initiative has the potential to transform both the off-shore wind industry and Scotland/UK power generation. Such power generation capacity needs to be put into perspective:
■ 1.5GW - Global operational off-shore wind farms (EWEA, Jan09)
■ 2.8GW - Global off-shore wind farms under construction (EWEA, Jan09)
■ 194MW - Largest single operational off-shore wind project (Lynn & Inner Dowsing, UK)
■ 500MW - Largest off-shore wind project under construction (Greater Gabbard, UK)
■ 30,000 jobs - Experts estimate that 4.5 jobs are created per MW of offshore wind
■ 2.8GW - Current clean power generation in Scotland (1.4GW Hydro, 1.3GW onshore wind)
■ 10.3GW - Current power generation in Scotland, from all sources

Clean power has gained substantial momentum in Scotland. Per the Scottish Energy Study, then 3% of energy generation was from renewable sources in 2002. By 2007, clean energy accounted for over 25% of power generation. If 6GW offshore wind were implemented then more than 50% of Scotland's power would come from renewable sources, primarily wind. Such commitment to wind power would make Scotland an international leader within the wind industry.

Ten development sites (numbered per graphic), with nameplate capacity and developer(s):
■ 1. Solway Firth - 300MW, E.ON Climate and Renewable UK Developments Ltd
■ 2. Wigtown Bay - 280MW, Dong Wind (UK) Ltd
■ 3. Kintyre - 378MW, Airtricity Holdings (UK) Ltd
■ 4. Islay - 680MW, Airtricity Holdings (UK) Ltd
■ 5. Argyll Array - 1,500MW, Scottish Power Renewables
■ 6. Beatrice - 920MW, Airtricity Holdings (UK) Ltd, Sea Energy Renewables Ltd
■ 7. Inch Cape - 905MW, NPower Renewables Ltd, Sea Energy Renewables Ltd
■ 8. Bell Rock - 700MW, Airtricity Holdings (UK) Ltd, Fluor Ltd
■ 9. Neart na Gaoithe - 360MW, Mainstream Renewable Power Ltd
■ 10. Forth Array - 415MW, Fred Olsen Renewables Ltd

Business plan shocker

Recently I read the worst ever business plan. It arrived in the mail. Below, in italics, are direct quotations (with spelling corrections) followed by some observations ...

Business plan pitfalls

Being a corporate financier then I read quite a few business plans. Their quality varies substantially. Well prepared, professional business plans stand out from the crowd. They explain the value proposition clearly, evidence assumptions, answer key questions and provide comfort on execution. A few reasons for poor plans are jotted below, along with some guidance and actionable steps ...

VC-venture success

Not all venture capital backed businesses are successful. OK, so that's not exactly a surprising or controversial statement. But how important are factors such as (a) prior experience of entrepreneur, (b) prior success of entrepreneur, (c) experience of venture capital firm in the likely success of VC-backed business? And how important is prior experience or prior success by entrepreneurs in the investment selection criteria by VCs?

It seems widely intuitive that prior entrepreneurial success, experienced VC-backers and even prior entrepreneurial failures could improve the chance of success of a new business. Indeed there could easily be a virtual-circle in effect - with financiers, customers and suppliers of a business providing favorable treatment to an entrepreneur that has a successful track record. Many people express opinions on such matters. But empirical evidence is uncommon.

A recent Harvard Business School working paper, "Performance Persistence in Entrepreneurship", reviewed all the funding, founders, vc-advisors and resulting success (IPO) of all US VC-backed businesses between 1975 and 2003. Their statistical conclusions confirm some common intuitition and highlight a few surprises ...

Private Equity vs Piracy - Wall Street Journal

Over some time now, the private equity has tried to bolster its poor public image. A gulf has emerged between the private equity self-image (best practice management and financing that creates substantial long-term economic value) and the image held by the world at large (slash-and-burn costs, fire employees, short-term profiteers).

Today Wall Street Journal - a highly respected and financier friendly publication - wrote an article that compared the industries of private equity and piracy. OK, so there's a healthy dash of journalistic humour afoot. But it certainly is not helpful to public perception of the industry. Odd that such a prominent industry has incited the rath of so many stakeholders - competition authorities, accountants, taxation policymakers, unions, even industry leaders.

VC poker ?

Seems that VCs, with no exits in sight and starved of fresh investor capital, have found a new hobby - poker. No kidding, the CVCA will shortly host a poker tournament for its members. OK, so it's just entertainment but organised by such a national industry association has the potential to be perceived poorly. Loss-suffering investors and job-fearing entrepreneurs might perhaps wonder why talented VCs don't have their sleeves rolled-up helping portfolio companies survive nevermind excel in these economically troubled times. As for encouraging VCs to gamble, the mind boggles ...

Geothermal potential

Things are looking up for geothermal power producers. Although one of the oldest clean technologies, and widely credited with virtually limitless power generation potential then geothermal makes only a tiny contribution to the energy needs of almost all countries (Iceland being a rare exception). Within clean energy then different technologies appear to move in and out of favour with politicians, utilities, consumers and investors. Geothermal may be on the verge of a burst of growth ...